CFPB and New York Attorney General close debt collection ring

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Washington, D.C – The Consumer Financial Protection Bureau (CFPB), in cooperation with the New York Attorney General, filed a draft mandatory judgment in federal court to resolve its case against a collection agency and its owners and managers. The ruling would order all participants in the New York state-based scheme to exit the collections market after their history of deception and harassment. Their collection agencies would also be shut down and face penalties totaling $4 million.

“It is illegal for debt collectors to orchestrate defamation campaigns via social media to extort consumers into paying,” CFPB Director Chopra said. “Our action with the New York Attorney General bans the ringleaders of this operation from the industry to stop further wrongdoing.”

“This debt collection operation used illegal and deceptive tactics to take advantage of consumers, and now they are paying the price for the damage they caused,” Attorney General Letitia James said. “Predatory debt collectors make a profit by targeting hard-working consumers and then illegally driving them even deeper into debt. These debt collectors used harassing phone calls and bogus threats to coerce consumers into paying, which is not only illegal but downright shameful. Today’s action should send a strong message to debt collectors across the country that we will not hesitate to use the full force of the law to hold them accountable when they hurt consumers.”

The defendant companies are JPL Recovery Solutions; capital of Regency One; ROC Asset Solutions, which operates as API Recovery Solutions and Northern Information Services; Check Security Associates, which operates as Warner Location Services, Pinnacle Location Services and Orchard Payment Processing Systems; Keystone Recovery Group; and Blue Street Asset Partners. The individual defendants are the owners Christopher Di Re, Scott Croce and Susan Croce, and Brian Koziel and Marc Gracie, who acted as managers of some or all of the companies.

The companies are affiliated collections agencies based out of a single location in Getzville, New York. Together they bought default consumer debt for pennies on the dollar. The debt came from high-yield personal loans, payday loans, credit cards, and other sources. The network then attempted to collect debts from approximately 293,000 consumers and grossed approximately $93 million between 2015 and 2020.

The CFPB and the New York Attorney General allege that the network used fraudulent and harassing methods in violation of the Fair Collection Practices Act and the Consumer Financial Protection Act. Specifically, the complaint alleges that the owners, managers and companies used the following illegal tactics to collect debt:

  • Falsely Alleged Arrest and Detention: Debt collectors threatened people with arrest and jail if they didn’t pay. In fact, people are not arrested or imprisoned for non-payment of debts.
  • Lies about legal action: The companies falsely threatened people with legal action, including garnishment of wages and confiscation of property. In reality, the network has never sought or received any court rulings.
  • Excessive and misrepresented debt amounts: The defendants lied about debts owed in order to convince people that paying the amounts actually owed represents a significant discount. To push people even further, collectors said the deals are only available for a short time.
  • Created “smear campaigns”: Using social media and other methods, the collectors urged people to pay by contacting their immediate and distant family members, grandparents, parents-in-law, ex-spouses, employers, work colleagues, landlords, Facebook friends and other acquaintances and disclosing the debts to them associated . The network did so even after victims told collectors to cut contact. Victims described this tactic as “emotional terrorism.”
  • People harassed by repeated calls: The collectors called several times a day for periods of a month or more. In fact, the network instructed its collections workers to have the person hang up on every call so they can pretend in their call logs that they were disconnected and then call back the next day. The collectors also used abusive and derogatory language and displayed intimidating behavior when called.
  • Failure to Disclosures Required by Law: The network did not provide people with legally required notices detailing their rights. When individuals asked for the notices, some collectors refused to provide them.

enforcement actions

Under the Dodd-Frank Act, the CFPB has the power to take action against any entity or individual who engages in any unfair, deceptive or abusive act or practice. The CFPB also has authority over debt collection practices under the Fair Debt Collection Practices Act. The proposed mandatory judgment filed today, if ordered, would require the companies and their owners and officers to exit the collections market. The defendants will also be required to pay a $2 million fine to the CFPB, which will be paid into the CFPB’s Victim Assistance Fund, and a $2 million fine to the New York Attorney General. However, if the defendants fail to make timely payments, each penalty due would increase to $2.5 million.

Today’s order follows that of the CFPB and the Attorney General of New York legal action in September 2020.

Read today’s proposed Settlement and Order.

Consumers may file complaints about debt collection activities or about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

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The Consumer Financial Protection Bureau is a 21st-century agency that implements and enforces federal consumer finance laws and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information visit ConsumerFinance.gov.

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